Introduction (1)

“Optimal” income taxation is always discussed against the background of classic economic theories:

In a very recent work, Piketty and Saez (2014) identify additional reasons why trends in top-income shares are correlated with the tax rates:

• labor responses
• evasion/avoidance responses
• and bargaining responses.

The current debate still lacks information about the top of the income distribution.

Our paper’s purpose is to identify anomalies in the tax patterns of ultra-wealthy Finnish people.

Introduction (3): Why Finland?

Our data (1)

Taloussanomat

Our data (2)

• 70,402 observations (N = ~15,000 ; T = 5)

• Scraped all five years: 2009 to 2013

• Created time series dataset

• Created panel dataset using names as unique id’s (N = 4867)

• Variables

  • Name

  • Total Income

  • Total Taxes Paid

  • Average Tax Rate

  • Rank

Research Question

What is the responsiveness of reported taxable income to changes in average tax rates?

• Our research is motivated by the framework laid down by Gruber and Saez (2002), Saez (2004), and Giertz (2007).

• Gruber and Saez (2002) and Giertz (2007) uses panel data to observe income elasticities. Saez (2004) uses aggregated time series.

• All of these papers look to observe long-term behavoiral elasticities, but given our dataset, we are only looking for short-term elasticies.

Key Findings (1)

Key Findings (2)

Conclusion

Limitations

Further research